MagicJack Latest Loser in Game of Telecom Arbitrage

Over the weekend the Telecom Law Monitor, a blog from the telecom practice group of Washington D.C. based Kelly Drye caught my eye when I spied that MagicJack’s sister/parent company, YMAX and AT&T were embroiled in a battle over, you guessed it. MONEY. For a long time many observers were trying to figure out just how MagicJack made money. Well, this FCC decision really helps make things clearer.

Something always felt kinda scammy about the whole MagicJack thing, which offers a $40 product that lets you make unlimited calls for a year (costs $20/year to renew). I never really bothered to look into their product to find out why, but Andy breaks it down.

I’ve seen a number of these schemes come down over the years. Once the large telecom companies get wise to the arbitrage tricks these smaller companies are trying to play, the game is up. MagicJack had a good run as far as these schemes go.

Meanwhile, I feel sorry for all the people who bought the MagicJack devices hoping they’d save them money. I suspect the device is about to become nothing more than a cheap paperweight.